Friday, August 27, 2010

Should Alan Simpson Be Forced To Resign Or To Publicly Debate?

As has been widely reported, Co-Chair of the Deficit Reduction Commission, former Senator Alan Simpson (R-WY) told some people from the Elderly Womens' League that social security is a system that involves "310 million tits." Many have called for his resignation, and I would say that quite aside from the obnoxiousness of such a comment, his presumption that "social security is a problem" certainly calls for it.

However, rdan over at angry bear says that he should not be removed. This would just lead to him being replaced by some other anti-social security slug, and things would proceed as before. Instead, he should be forced to debate the issue on TV, either before or after the upcoming elections. I do not know which is better, but I am certainly concerned that the key people on that commission are so stacked to attacking social security, most likely through raising the future retirement age, when it appears that some groups of the population that may need social security the most, such as poor women, may actually be experiencing decreasing life expectancies.

Fuzzy, No, that's not the issue. The problem is that he dismissed the concerns of people who sincerely have an interest in the outcome of any changes to social security and not only said that those people just weren't smart enough to understand the issue, but also that people on social security or who plan to rely on it as part of their retirements are babies who need mommy to help them.

I think the problem with this commission, beyond the fact that it was not necessary, is that its members were supposed to be focusing on the deficit as a whole but they seem to be only discussing how to cut social security when they speak in public. Nothing was supposed to be "off the table" for this group, but it appears that only one thing is on the table. Maybe because that is the only program people are interested in, or because when Simpson and Bowles have made public statements on SS, they don't appear to understand the issue other than the canards that the system is broke without any assets and something must be done urgently about this program in particular.

It would be great to see a debate on this. My only fear is that the Press would call Bowles, as the Democrat, to play the role of the opposition. I don't know how having two people who don't know what they are talking about would do anything but confuse the public more than they already are. Both would just be debating which shade of green best describes the sky.

Excellent post, Suffern AC. The easy and totally ridiculous target, Social Security, is the focus of cutting. This is the only developed country in the world where this could happen because of a tragic loss of community and commonwealth. We are steadily on track for a gradual disintegration of the United States unless there is a willingness mainly by the right wing to acknowledge we are all in this together and not just rich white folks.

Social Security and Medicare are part of the budget, so they should be subject to potential adjustments, like all other entitlements and discretionary spending.We are all in his together.Social Security is as sacred a cow as any other appropriation we deem important for the general welfare.Being that the majority of Social Security beneficiaries depend on this program for over half of their benefits, we need to do at least 2 things:1. Only cut benefits if we deem the unfunded liabilities as harmful to our deficits, and thus, our faith and credit as its ultimate backer.2. Ensure that the trust fund is utilized so that the future liabilities are funded, rather than unfunded.Don Levit

it's too bad that don levit has sprouted up here. he understands nothing, but has looked up a lot of citations so can use words that sound like they mean something.

SS is an insurance program paid for by the people who will get the benefits. It has not a damn thing to do with the deficit. It is off budget for a reason.

the actuarial deficit projected for Social Security itself can be closed with a "tax" increase on the people who will get more benefits because they are going to live longer.. a tax increase that amounts to twenty cents per week per year.

that figure is accurate even though folks who can't do arithmetic but have been stunned into fear and panic by reports of "Trillion Dollar Unfunded Deficits"... do the arithmetic, and 15 Trillion Dollars in Present Value over the Infinite Horizon reduces to a tax increase of twenty cents per week each year for about the next seventy years. After that point there is no reason to think any further tax increases would be necessary.

Meanwhile the people who are paying the new higher tax will have had increases in their real wage such that after paying not only Social Security but the worst case Medicare increases, they will have more than twice as much take home as they have today.

The huge horrible deficit crisis... at least as far as "entitlements"... is a fraud.

The on-budget deficit can be closed simply by rescinding the Bush tax cuts that were supposed to pay for themselves but didn't.

as for the politics and Simpson's out of line comments... i don't know. i guess the "tits" and other arguably sexist comments are better politics than the facts.

but if there is to be a debate i would far rather see it used as a chance to put the facts in front of the people very very clearly, than just another chance for "liberals" to show that they are caring, sensitive people.

we already know that. but money is money. and the people need to be made to understand that the catfood commission, and our dear president, are lying about the money.

"Social Security and Medicare are part of the budget, so they should be subject to potential adjustments, like all other entitlements and discretionary spending." Don Levit

Don, You don't give up! You're half right and half assed all at the same time. Social Security is "off budget" by law. From the horse's mouth we read: "So, by 1986, Social Security was technically off-budget, but it was still being used in the deficit calculations. Absent other legislative change, this would have continued until 1993. However, in the Omnibus Budget Reconciliation Act (OBRA) of 1990 the law was changed to stop the use of the Trust Funds for any function in the unified budget, including calculations of the deficit. One sub-part of OBRA 1990 was called the Budget Enforcement Act (BEA), and it was this sub-part that specified this change in the law.

The BEA budget treatment of Social Security basically remains the law to the present day. Specifically, present law mandates that the two Social Security Trust Funds, and the operations of the Postal Service, are formally considered to be "off-budget" and no longer part of the unified federal budget. (The Medicare Trust Funds, by contrast, are once again part of the unified budget.) So where matters stand presently is that the transactions to the Social Security Trust Funds and the operations of the Postal Service are "off-budget" and everything else is "on-budget." http://www.ssa.gov/history/BudgetTreatment.html

Yes, the cheats do try to include SS funds and Trust Fund assets in the budget computations, but they do so for illegitimate reasons. Try hard to recall Don that SS is self funded. FICA contributions are not income taxes collected for the purpose of paying gneral budget expenses. Entitlement?? Sure, participants pay FICA taxes throughouot their working lives and they are then entitled to be beneficiaries of the program.

Discretionary??? That's the spending that the government doesn't have to do, like wars of adventure and corporate welfare and tax cuts for the One Percent Club. Funny how you don't ever seem to talk about discretionary spending when the need for budgetary restraint is discussed.

Coberly:The people understand Social Security to be an insurance program, Roosevelt wanted it that way, but that's not what it is, according to the Supreme Court, the FASAB (the accounting advisor for the government), citations which I have provided.I have many more from other reputable government agencies.What have we received from you in response? Very few citations, and a whole lot of personal opinions and innuendoes against my intellect and character.I can handle the innuendoes, but why would your opinions supersede that of the Supreme Court and the FASAB?For that you should be issued a citation!

And, for Jack and Coberly:The reason the deficits have not been as large is due primarily to the Social Security surpluses.We had 3 years of surpluses in the Clinton years, only because of the Social Security surplus.Now, if Social Security is not part of the budhget, why is its surplus included in the unified budget?Oh, this government can be complicated, can't it?Maybe that has something to do with its lack of transparency.Don Levit

Come on Don, we've been over this ground repeatedly. Remember? The when FICA contributions are in excess of benefits paid in a given year that excess becomes part of the Trust Fund total and is represented by T-Bills, as is any other borrowing that the Treasury does, and is utilized by the Treasury within the general budget. It's borrowed funds and can only be thought to be "reducing" a deficiencyin the general budget if one ignores the requirement to not describe the budget in as a unified account. The Trust Fund assets are used by Treasury to supplement cash flow in the general budget, but are then accounted for as debt owed to the Trust Fund. All the mumbo jumbo being tossed around by Trust Fund deniers, like yourself, is to confuse the public into thinking that there is no requirement on Treasury's part to repay those assets to the Trust Fund when needed, plus interest. That would require reducing discretionary spending and/or raising taxes, like on the very wealthy that have been enjoying a long tax holiday over the past eight years.

There are a number of federal agencies who report debt and deficit numbers, we have OMB numbers, and BEA numbers, and CBO numbers, and SSA numbers, and Treasury numbers, and I suspect I haven't exhausted the pool. And because those agencies have different agendas depending on their particular legislative mandates various components of those debt and deficit numbers score in different ways, what are assets to one account are liabilities to another and measures designed to calculate borrowing needs often conflict with those that determine budgeting. And those rules have changed over time particularly in what is considered "on budget" and "off budget".

As commenters we have two choices, one is just to use the ordinary language definition of debt and deficit and use the top end number reported in the MSM as "the" budget surplus/deficit which is generally the CBO number as in "Obama is on track for a $1.8 tn" or "$1.4 tn" deficit for 2010. And this number pretty much tracks what was at one point the legal "unified budget" that no longer is. Because for cross comparisons between Administrations you need some common metric even as the legal rules for accounting change underneath. But if you are going to dive in and address the numbers at the more granular level of the data tables you need to deploy terms more rigorously and determine exactly what is being measured and why.

Which is where Don falls down. He is working from a top level understanding of 'debt' 'deficit' and 'liability' and feels free to dive deep into "reputable government agencies" to pluck pearls without understanding the shells which produced them, not getting that the sea floor is not the same as surface level.

I think the technical term is 'category error'. Don is like a magpie or a pack rat who sequester away shiny objects without reference to what anyone else considers intrinsic value, to a magpie a foil gum wrapper is of equal worth to a gold ring, the message that penetrates is "Shiny!!!"

Don keeps dragging out his treasures and wondering why we don't fall down in admiration. For example Don persists in thinking Flemming v Nestor (http://en.wikipedia.org/wiki/Flemming_v._Nestor) is some repudiation of FDR's insurance model when instead it simply reinforces the message in the first Social Security Report signed by Frances Perkins (http://www.ssa.gov/history/reports/trust/tf1941.html). And I could attempt to explain why this is but end up helpless given the unassailable Levit counter-argument:

"We had 3 years of surpluses in the Clinton years, only because of the Social Security surplus."Not true. At least of FY 2000

"Now, if Social Security is not part of the budhget, why is its surplus included in the unified budget?"Because OMB and CBO score the budget in different ways for different reasons. And Treasury scores the resultant debt in orthogonal ways as well.

But it is like lecturing a boulder while it is running down a hill, Don is going to land where he wants.

Bruce:I am glad you provided the link by Perkins.However, when I went to it, there was an error.Can you provide the title of the report so I can google it?Even better, provide some citations that will back your point.This is not an issue of who is right or who is wrong. That is a game played by babies and morons.We are digging for the truth, so if you want to play that game, I'm in.The first requirement to successfully play that game is to admit you may be wrong.Maybe you're too insecure to admit that.Don Levit

No Don. The truth is in plain sight. It is the obfuscation of that truth that the anti working class forces in our society are seeking to spread as an alternative reality. If your personal 401K plan has been heavily invested in low yielding 20 year T-Bills is that fund a drain on our economy because both interest and principle are due to be paid back by the Treasury? Should your Treasury note holdings be regarded as "just so many IOUs" because the government may have to raise taxes to pay back both you and all other holders of T-Bills? There is no difference Don between the Trust Fund assets and your retirement assets. They're just different funds awaiting someone's retirement.

And why are you neglecting to focus on discretionary spending as a means of controlling government deficits? Are you satisfied with the way the government is spending your tax money and T-Note funds in Iraq and Afghanistan? There are lots of ways that the government could be more responsible regardingits finances. Why can't you find any other approach, but to support a scumbag like Simpson, who has made it very clear that he is not in the least objective and comes to his task on the Deficit Commission with a predetermined mind set and agenda. The real mystery is why any one still considers Obama to be neutral on these questions.

Jack, if I invested in 20-year Treasuries in my 401(k), I would considered that a funded liability of the government.They have my money. The interest I earn represents the time value of money.I don't know what the government did with my proceeds. All I know is I should get my return on principal plus investment interest, just as if I put my money in CDs.When the government borrows from the trust fund, this is an internal transaction, not a voluntary exchange between 2 distinct entities.One government agency, the Treasury, borrows from another government agency, the trust fund.Because these are 2 internal governmental entities, the right hand is borrowing from the left hand, the body (the government) is borrowing from itself.It is a bureaucratic, internal decision to borrow the money to use on current governmental expenses.Years later, when these treasurues are redeemed, if they cannot be liquidated like other 401(k) investments, without going to the public and asking for more debt, in my opinion, they are unfunded.There is a big difference between a funded liability and an unfunded liability.And, yes, we need to explore various ways to reduce our deficits, of which Social Securirty is merely one option. I have no problem with Social Security as a concept.I do not favor borwing from the trust fund as a convenient way to issue more debt, without it having a current effect on the economy.Underlying this intragovernmental debt is debt to the public, burdening the future generations.Don Levit

"When the government borrows from the trust fund, this is an internal transaction, not a voluntary exchange between 2 distinct entities.One government agency, the Treasury, borrows from another government agency, the trust fund." Don Levit

You know that is not true. You are deliberately lying or you refuse to accept the truth about Trust Fund assets which are well described in the legislation which created the entire system. If the truth is what you seek then stop trying so hard to avoid the truth.Or, maybe you prefer to lie about things you don't like.

http://www.ssa.gov/history/reports/trust/tf1941.htmlor you can go up a level and get all the Reports from 1941 to 2004 on this page:http://www.ssa.gov/history/reports/trust/trustreports.html

The official title is: First Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund, in compliance with the provisions of section 201(b) of the Social Security Act, as amended

And Don you have made exactly zero attempts to engage with my argument, instead just restating your own. Since the consensus of opinion among the commenters seems to be on my side and Barkley isn't jumping down my neck for screwing up his post I am thinking it is I who is on secure ground here.

For the rest of you, who might actually be interested in some actual truth seeking Dean Baker has a GREAT post up at HuffPo this morning which puts some meat on the bones of the Northwest Plan and inserts some precise numbers into Rosser's Equation. (Oh and smacks Alan Simpson around a little bit) SWEET!

Jack:When I wrote that when the Treasury borrows from the trust fund, it is not a voluntary action between 2 internal entities, and you said that was a lie, back it up with a citation!I am out of town, but will be able to provide a citation to support my statement on Wed.Don Levit

Bruce:I read the 1941 report.What in there do you find particularly persuasive to your argument?And, what exactly is the argument with you I am not engaging in?If you would provide citations to back your opinions, it would help in flushing out the truth versus fiction.I have provided citations which state the trust fund does not provide the assets neeeded to pay future benefits.This is because, more than likely, public debt will have to be issued to redeem the securities.Now, if you still believe those conditions mean the liability is funded, that is your prerogative.Don Levit

Written like a true troll. Don, you know very well that we have been over this bridge repeatedly, if not here (EconoSpeak) certainly at AngryBear. It is in the legislation. It has been described by individuals well familiar with the mechanics of the Trust Fund assets, how they get there and how they're retrieved for supplementation of the benefits funding. You have the right to discuss, but you abuse the right to participate by revolving around your own deceitful presentations repeatedly and refusing to credit what has already been offered to you in way of reference syupporting mechanisms that you either fail to understand or fail to accept. In a nut shell, you are wasting time and space here and at AB. I suspect that that is your actual goal.

This comment was first posted at AB, but I feel strongly about the issue and I want to share it here. Especially now that ES has been infected by a troll virus.

In response to a comment that reads in small part,"....but you are misssing the point that we are possibly at a point of economic collapse." CoRev.

The sky is falling, the sky is falling. And the only way to prepare for the end of times is to throw the old folks out the door and into poverty inspite of their having been paying into a system that was required of them throughout their working lives. We're not talking about any Palm Beach denizens in their Lexus cars. We are talking about working class Americans that participated in their country's legislatively mandated system that was designed to keep them off the welfare rolls in their old age. I keep focusing on the legislation only as a way of pointing out that this system was not dreamed up by some patronizing beaurocrat, but well thought out by our Congress. Over the years the mechanism has been tinkered with by the Congress under the guise of "preserving" its finanacial integrity and promise to its future beneficiaries. Now, at a time when corporations and small businesses alike are offering little in the way of a defined pension plan to workers, Social Security takes on greater importance than ever in its role as the means of preventing abject poverty in old age.

So again I ask, what the devil is the intention of arguing the solvency of Social Security. It has been demonstrated repeatedly that the program is currently solvent and will be for the next quarter century. Its solvency will continue after that by either improved economic conditions in general or by modification of the contributions rate. Workers are living longer, therefore, they need to put in a bit more to assure their own financial well being in retirement. The clearest point is that Social Security does not contribute to the current budget deficit any more so than do bond holders in general. it is disengenuous to claim that the holders of government debt, and that is what the Trust Fund is, are responsible for the deficit and should be made to accept a discounting of their assets by the debtor. Bull shit!!! I don't think that China, Japan, nor Korea will buy that scenario, and there is no reason that American workers should do so either. If the general budget needs balancing then the Treasury needs to raise its receipts and should be advicing the Congress of same. If the Congress is spending too much on unfunded programs, war and corporate welfare come to mind, then the Congress needs to make adjustments to those spend thrift activities. If your 25 year old girl friend wnats a new Ferrari (or maybe you yourself and your guy friend do so) do you sell, or borrow against, your insurance policy to raise the cash, and tell your kids and wife to screw off? This entire public discussion is being promulgated and stimulated by a handful of extremely wealthy individuals and their paid for sychophants and propagandists. Hopefully the voting public will come to its senses and see this assault on their future for the dirty trick that it is. And for what? What do the One Percenters need more than they already have? We are living in and witnessing a level of personal avaricious greed that knows no bounds. The average working American has to protect his/her own best interests by letting their elected representatives know that they know it's a scam.

Don I didn't expect you to get it, the citation was for the benefit of others. The key text is as follows:

"Although the 1935 statue did not specify that the annual appropriations to the old-age reserve account be equal to the amount of contributions paid into the system, in practice these appropriations were approximately equivalent to contributions collected, less an allowance for administrative expenses. This practice was based on the approximate correspondence between taxes collected, minus administrative expenses, and the estimated annual premium required for title II benefits computed on a 3-percent reserve basis as specified in the act. In reaching this correspondence, account was taken of uncertainties involved in estimates necessarily based on somewhat arbitrary assumptions and on long-range projections into the future."

The 1941 Report supports the conclusion of Flemming v Nestor that there is no direct connection between individual contributions and individual benefits, that is while the entire system is set up to APPROXIMATE Pay-Go, there is an explicit recognition that revenues and costs could get out of line in any given year and that the main function of the Trust Fund is to buffer against that.

Jack: "...Social Security does not contribute to the current budget deficit any more so than do bond holders in general. it is disengenuous to claim that the holders of government debt, and that is what the Trust Fund is, are responsible for the deficit and should be made to accept a discounting of their assets by the debtor. Bull shit!!! I don't think that China, Japan, nor Korea [ie, other US government creditors ]will buy that scenario, and there is no reason that American workers should do so either. If the general budget needs balancing then the Treasury needs to raise its receipts and should be advicing the Congress of same. If the Congress is spending too much on unfunded programs, war and corporate welfare come to mind, then the Congress needs to make adjustments to those spend thrift activities...."

Well said Jack. And the budget could be balanced in the US by the government there simply printing money - given that so many essential commodities are being traded in US dollars.

Sure enough, though social security entitlements may be maintained in fiat dollar terms and there'll be inflation passed on to the world as a whole.

I tend to agree with Joseph Stiglitz that the US government has filled the coffers of big American corporations far beyond any amount of debt and liability they may have demanded recompense for. A big looting has gone on under the noses of ordinary citizens. This will continue as long as the corporate press continues to hold sway over enough readers.

I can see a great monetary inflation unfolding. Finally this giant pool of liquidity will reveal the hidden inflation of environmental rape and other forms of govt-corporate pillage that has gone on now for decades. Since even before the collapse of Bretton Woods and the bankruptcy of the United States in 1971.

"Finally this giant pool of liquidity will reveal the hidden inflation of environmental rape and other forms of govt-corporate pillage that has gone on now for decades."

"The(re) is no such thing as social 'security'."

The working class always tries to negotiate their way to a better life. Their success at same has not been demonstrated. In the pasta severely exploited people have exploded under the oppressive weight that accompanies their waiting for the change.

"The working class always tries to negotiate their way to a better life."It's the way of life that prevents a better way. 'Working class' is such a demeaning term. It implies that you're a member of a group that simply sits back and waits for someone (from a different 'class') to employ you. How much more powerful a position is it to refuse to be a someone's beck and call and, instead, find more satisfactory ways of sustaining oneself. However, not through the exploitation of others.

"How much more powerful a position is it to refuse to be a someone's beck and call and, instead, find more satisfactory ways of sustaining oneself. However, not through the exploitation of others."

Some few do, but most don't and cannot. It is the structure of society. We are grouped together for many purposes one of which is economic activity. It has been a very long time since individualism was possible in such a society, as a general rule. I suppose that is why we so much admire the few that appear to be such individualists. It is not the group aspect of society that is the problem. It is the nature of man's inhumanity to man that is the issue and that's not subject to change. It leads to periodic upheaval.

The working class is a term I use only to distinguish those who have to work within this society, as opposed to owning some sector of the economy, though even many owners are little different from the working class in terms of the benefits derived from the economy. There is no pejorative character to the term. There's no shame in working for the purpose of meeting one's needs.

Jack: "There's no shame in working for the purpose of meeting one's needs."

Unless there is exploitation and other tainted practices going on.

If one is working for another as a purely voluntary transaction. If there is an absence of coercion on both parties (eg there has been no takeover of the commons). If both parties enter the arrangement on equal terms.

But you are closing in on it. Exploitation is the history of mankind. There is nothing humane about human behavior. It therefore requires a balance of power between groups to maintain a peaceful coexistence. The balance requires that the mass of the people understand their own plight and the nature of power relationships within group dynamics. The people need to be knowledgeable. That requires their being educated.

"When will the people be educated? When they have enough bread to eat, when the rich and the government stop bribing treacherous pens and tongues to deceive them. When will this be? Never." Max. Robespierre

Sorry to wax philosophical, but that comment, made a bit more than two centuries ago, reminds me of the Tea Party phenomenon and the media in general.

Jack:I tend to agree with you.Brenda makes a valid point in that if work is chosen, rather than taken, to survive, we normally don't get the person's best they have to offer.I think the group dynamics you describe, because it does discount individual initiative, produces inferior products and services.And, you're right about man's mistreatment of man.Communisn is when man uses man.Capitalism is just the reverse.Don Levit